I'll make this succinct. I am able to withdraw around $20,000 from my traditional IRA Vanguard account without paying any taxes due to my financial situation. I'm thinking that I should withdraw this amount and transfer it to my Vanguard Brokerage account (not an IRA, but has the same portfolio as my IRA). Result; no tax and my $20,000 goes into an identical account.
Does this sound like the right thing to do?
You are better off converting the IRA to a Roth IRA (whether self-directed or not). As a brokerage account, you will still pay taxes on interest, dividends, and capital gains whenever you sell. As a Roth IRA, you will pay no taxes on interest or dividends and no taxes when you withdraw the money.
The right thing to do is to convert the $20,000 into a self - directed brokerage Roth IRA.
That money and any growth you achieve will be tax free.
Note: all new Vanguard accounts are brokerage accounts now.
You are better off converting the IRA to a Roth IRA (whether self-directed or not). As a brokerage account, you will still pay taxes on interest, dividends, and capital gains whenever you sell. As a Roth IRA, you will pay no taxes on interest or dividends and no taxes when you withdraw the money.